In about a month, 43 small businesses will start paying off loans received through the first round of the Columbus INvigorate program.
The repayments are automatic and begin around Dec. 15, said Eric A. Frey, executive director of the Administrative Resources association, a nonprofit governmental association that is administering the program.
“That’s when we’ll set up the first payments to be made,” he said.
Loans are paid off over a three-year term. Frey said the repayments will be made via automated clearing house payments.
“We did the distribution the same way,” he said. “…They’ve signed an ACH form that provided us their banking information and agreed to allow us to distribute [the loan funds] to their bank account. We had them also sign a section that said ‘We authorize and allow you to then basically debit our account monthly.’”
Frey said that if a business doesn’t have enough for the ACH payment, ARa will receive a notification and then contact the business about setting up a different payment plan.
However, Frey said that while he is concerned about COVID-19 and the possible financial strain of the holidays, he doesn’t expect either issue to cause difficulties with businesses’ repayments.
“Everything, for the most part, is back up and open again for now,” he said. “And I hope they all have been able to adjust to the current normal.”
Frey also said that the ARa hopes that the program has helped businesses through difficulties amid the pandemic.
“I know that some are still struggling, and I think some have really weathered the storm, and I wish the best for all of them,” he said. “So we’re glad to do what we can to help with this program. And I know that we’ve had some come in and ask if they could pay it off early or have paid it off early so that they can wrap things up. So we’ve been hearing a little bit of everything.”
Frey said that two businesses have already paid off their loans early, and he knows of a third that intends to do the same.
On Wednesday, the city amended its contract with ARa regarding the loan program. City assistant director of community development Robin Hilber explained that the original contract said that the city would pay ARa $25,000 per year over a three-year period, for a maximum of $75,000.
“But of course this first year has been very labor intensive,” she said. “They actually developed the program. We’ve had two rounds now of taking applications and approving those.”
In light of this, the board of works approved a change to the contract, which now states that the city will still pay the ARa a maximum of $75,000 over the three-year-period, but the yearly amount may vary.
“Contractually, ARa has spent a lot more time than we anticipated,” said Mary Ferdon, the city’s executive director of administration and community development. “And hopefully, the last couple of years, it’ll be more just collecting the payments, which should be much less labor intensive. So it’s really just shifting the cost of administering the program to allow us to be more flexible.”
Hilber said that this is the second change to the original contract; it was previously amended to allow the Federal Emergency Management Agency access to the loan program records.
“We are submitting these administrative fees to FEMA and hoping that they will pick those up,” she said. “I believe FEMA will cover up to 75% of the $75,000.”
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Columbus INvigorate is a loan program for small businesses within the Columbus city limits who have been affected by the COVID-19. Businesses were able to apply for loans ranging from $5,000 to $25,000. These loans have a six-month deferral of interest and principal payments on the three-year terms. Interest rate after the six-month deferral is 1%.
During the first round of Columbus INvigorate, 43 local small businesses received loans totaling $716,000, according to city records. This left about $300,000 available from the initial $1 million in city funds that Columbus City Council approved for the program in April.
In the fall, eight businesses applied for a total amount of $168,000 in the program’s second round, Frey said in a previous interview. Hilber said Wednesday that some of these loan applications have not yet been “formally approved.”
Only one of those applications came from a business who received funding during the first round. The program allowed businesses who received first round funding to apply in the second round but stipulated that businesses could not receive a cumulative amount of more than $25,000 between the two rounds.
The loan program has other stipulations for businesses. Its rules state that “The business will commit to remain open or reopen and retaining stipulated number of employees.”
The program also stipulates that applying businesses must have gross receipts of under $2 million a year, have fewer than 50 employees (full-time and part-time), show a decline in 2020 revenue due to COVID-19 and have been in business as of Jan. 1, 2020. Businesses are also required to use the funds “for ordinary and necessary business expenses, but not debt consolidation.”
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